As we near the end of the year we are again reminded of the benefits of living in Colorado. Beyond our incredible weather and vibrant communities, our local housing market has stayed relatively strong in the midst of a tough national economy.
The big news truly is today's low rate environment. Homeowners have been enjoying an unprecedented period of low mortgage rates, with an all-time low a few weeks ago. I never imagined locking 30 year fixed rate loans below 4.0%, but that has been a reality lately for well-qualified clients. It is not too late, however the best rates pass quickly, sometimes in a matter of hours. Those who are prepared to lock have saved a lot of money.
Many of my clients have recently been exploring investment property purchases to grow their wealth and diversify their portfolio. Thanks to the low rates and other factors, today is an ideal time to consider this investment option. Contact me if you'd like to discuss the opportunities available to your clients in this market in more depth.
Thank you again for your referrals and support of my business! It is always my goal to provide your clients with the highest level of service, coupled with great rates and a broad offering of loan products.
Monday, October 24, 2011
Make the Most of Your Flex Account in 2012
Will the maximum amount that I can contribute to my employer's medical flexible spending account shrink next year? I recall hearing that the contribution limits will change.
Actually, the rules won't change until 2013, when the maximum amount employees can stash in a medical FSA will be capped at $2,500 per year. Currently the maximum limit varies by plan, but many employers allow employees to set aside $4,000 or more in these pretax accounts for medical expenses. You can sign up for your 2012 contributions during open-enrollment season this fall.
In light of the impending change, however, you can make the most of your FSA in 2012. If you've been thinking of having an elective medical procedure done that's not fully covered by insurance – such as laser eye surgery for you or orthodontia for your kids – you might want to schedule it before the FSA limit changes, so you'll have access to more tax-free money.
And, if you plan carefully, you may have an even bigger stash of tax-free money to use for out-of-pocket medical expenses during the first 2½ months of 2012 or 2013. If your employer extends the deadline for using FSA funds to March 15 of the following year, rather than December 31, you can combine any funds remaining from the previous year with the entire amount you earmark for the current year – even though the full amount has not yet been deducted from your paycheck. If, for example, you have $1,000 left over from 2011 and you sign up to contribute $4,000 to your FSA for 2012, you may be able to use $5,000 in tax-free money to pay for out-of-pocket medical expenses from January 1 to March 15, 2012.
Actually, the rules won't change until 2013, when the maximum amount employees can stash in a medical FSA will be capped at $2,500 per year. Currently the maximum limit varies by plan, but many employers allow employees to set aside $4,000 or more in these pretax accounts for medical expenses. You can sign up for your 2012 contributions during open-enrollment season this fall.
In light of the impending change, however, you can make the most of your FSA in 2012. If you've been thinking of having an elective medical procedure done that's not fully covered by insurance – such as laser eye surgery for you or orthodontia for your kids – you might want to schedule it before the FSA limit changes, so you'll have access to more tax-free money.
And, if you plan carefully, you may have an even bigger stash of tax-free money to use for out-of-pocket medical expenses during the first 2½ months of 2012 or 2013. If your employer extends the deadline for using FSA funds to March 15 of the following year, rather than December 31, you can combine any funds remaining from the previous year with the entire amount you earmark for the current year – even though the full amount has not yet been deducted from your paycheck. If, for example, you have $1,000 left over from 2011 and you sign up to contribute $4,000 to your FSA for 2012, you may be able to use $5,000 in tax-free money to pay for out-of-pocket medical expenses from January 1 to March 15, 2012.
Weekly Info 10/22/2011
Mortgage interest rates improved slightly on the week on mixed economic data. Economic data better than expected included the October NAHB Housing Market Index, September Housing Starts, weekly jobless claims, and the October Philadelphia Fed Business Index. Economic data weaker than expected included the October New York Empire State Manufacturing Index, September Building Permits, and September Existing Home Sales. Inflation data was generally in line with expectations. However, the overall Producer Price Index (PPI), a measure of wholesale prices, was up 0.8% on expectations that it would be up 0.2%. Uncertainty persists surrounding the European sovereign debt crisis. German officials are saying that a deal will be resolved by next Wednesday. Yesterday the Greece Parliament voted to cut spending, appearing to meet the demands of the ECB, IMF, and EU for additional aid.
Friday, July 22, 2011
Weekly Info 07/22/2011
Mortgage interest rates increased slightly on the week on continued uncertainty surrounding European sovereign debt and US negotiations regarding the debt ceiling. Economic data of note included June Housing Starts and Building Permits, both of which were better than expected. June Existing Home Sales, though, fell 0.8% on expectations that they would increase by 2.5%. Weekly jobless claims increased by 10k, up more than expected. The July Philadelphia Fed Business index increased to a level of 3.2, indicating slight expansion after a couple of months of contraction within the sector. Bank of America reported its largest quarterly loss in its history, a loss of $8.83 billion in the second quarter. Also, China’s factory sector contracted for the first time in a year.
Monday, July 11, 2011
Latest Bill Calls for Fannie, Freddie Merger
A bill is expected to be introduced today in the House of Representatives that calls for a merger between government-sponsored enterprises Fannie Mae and Freddie Mac, The Wall Street Journal reports.
Rep. Gary Miller, R-Calif., who is introducing the bill and who is also a real estate developer and former home builder, proposes that the newly merged firm also be restructured in how it operates. It would purchase mortgages and sell them to investors as securities that are backed by the government.
Unlike other bills that have called for winding down of the GSEs and privatizing them, Miller’s bill would not seek private owners for the new entity. However, the new firm would be privately capitalized.
“Banks would pay a ‘guarantee’ fee on loans that would fund the firm's operations and maintain adequate capital. Investors would pay an additional fee to finance an insurance fund that would cover catastrophic losses,” The Wall Street Journal explains.
The new firm would be regulated by the Federal Housing Finance Agency. The FHFA would ensure the firm’s market share never exceeds 50 percent of the mortgage market.
Lawmakers continue to wrestle over the fate of the GSEs, which have cost taxpayers $138 billion since the government took them over in 2008. Earlier this year, the White House called for winding them down. A series of bills currently in Congress are attempting to shrink Fannie and Freddie’s role and privatize them.
Miller’s bill is expected to garner bipartisan support.
Source: “Bill Calls for Fannie, Freddie Merger,” The Wall Street Journal (July 5, 2011)
Rep. Gary Miller, R-Calif., who is introducing the bill and who is also a real estate developer and former home builder, proposes that the newly merged firm also be restructured in how it operates. It would purchase mortgages and sell them to investors as securities that are backed by the government.
Unlike other bills that have called for winding down of the GSEs and privatizing them, Miller’s bill would not seek private owners for the new entity. However, the new firm would be privately capitalized.
“Banks would pay a ‘guarantee’ fee on loans that would fund the firm's operations and maintain adequate capital. Investors would pay an additional fee to finance an insurance fund that would cover catastrophic losses,” The Wall Street Journal explains.
The new firm would be regulated by the Federal Housing Finance Agency. The FHFA would ensure the firm’s market share never exceeds 50 percent of the mortgage market.
Lawmakers continue to wrestle over the fate of the GSEs, which have cost taxpayers $138 billion since the government took them over in 2008. Earlier this year, the White House called for winding them down. A series of bills currently in Congress are attempting to shrink Fannie and Freddie’s role and privatize them.
Miller’s bill is expected to garner bipartisan support.
Source: “Bill Calls for Fannie, Freddie Merger,” The Wall Street Journal (July 5, 2011)
Wednesday, June 29, 2011
Pending Home Sales Turn Around in May
Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of REALTORS®.
The Pending Home Sales Index rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.
Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said.
“Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn., Indianapolis, Minneapolis, Houston, and Seattle,” Yun added.
Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal, sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”
“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.
Regional Performance
▪ The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago.
▪ In the Midwest, the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010.
▪ Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago.
▪ In the West, the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.
Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.
Source: NAR
The Pending Home Sales Index rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.
Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said.
“Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn., Indianapolis, Minneapolis, Houston, and Seattle,” Yun added.
Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal, sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”
“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.
Regional Performance
▪ The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago.
▪ In the Midwest, the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010.
▪ Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago.
▪ In the West, the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.
Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.
Source: NAR
Freddie Mac: Better Days Ahead in Housing
Freddie Mac’s chief economist is optimistic that the housing market and economy will improve in the second half of 2011.
Freddie Mac Chief Economist Frank Nothaft said mortgage rates will likely remain historical lows of between 4.5 percent and 5 percent for the remainder of the year. Also, he expects more buyers to stop waiting on the sidelines as recent price drops in home prices have improved affordability.
Nothaft said consumers’ uncertainty about the economy has caused them to delay home purchases and other “big-ticket items.”
"Some potential buyers who have the means to buy are awaiting clearer signs that home values have firmed," Nothaft says.
But Nothaft says they should be getting their signs in the second half of the year, with projected job gains, and a growing, improved economy.
"Even though near-term concerns over income and sales growth are restraining consumer spending, business hiring, and new building, a number of positive signs in the economy indicate that growth will continue and is likely to accelerate in the second half of this year," Nothaft said. "Look for a gradual improvement in housing activity in the coming year.”
Source: “Freddie Mac Economist Sees Sunny Economy in Second Half,” HousingWire (June 27, 2011)
Freddie Mac Chief Economist Frank Nothaft said mortgage rates will likely remain historical lows of between 4.5 percent and 5 percent for the remainder of the year. Also, he expects more buyers to stop waiting on the sidelines as recent price drops in home prices have improved affordability.
Nothaft said consumers’ uncertainty about the economy has caused them to delay home purchases and other “big-ticket items.”
"Some potential buyers who have the means to buy are awaiting clearer signs that home values have firmed," Nothaft says.
But Nothaft says they should be getting their signs in the second half of the year, with projected job gains, and a growing, improved economy.
"Even though near-term concerns over income and sales growth are restraining consumer spending, business hiring, and new building, a number of positive signs in the economy indicate that growth will continue and is likely to accelerate in the second half of this year," Nothaft said. "Look for a gradual improvement in housing activity in the coming year.”
Source: “Freddie Mac Economist Sees Sunny Economy in Second Half,” HousingWire (June 27, 2011)
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